Key Points:
- Tesla is sending a team to India to explore potential sites for a proposed $2 to $3 billion electric car plant, signaling its entry into the Indian EV market.
- India’s recent tax incentives for EV manufacturers committing to local production have boosted Tesla’s plans for the Indian market.
- While the Indian EV market is currently small, it is growing, and the government is targeting a 30 percent penetration by 2030.
- Tesla has been in talks with Indian government officials for over a year and has expressed interest in establishing manufacturing facilities in India.
Tesla is set to send a team from the United States to India by late April to explore potential sites for a proposed electric car plant valued at $2 to $3 billion, according to sources cited by the Financial Times on Wednesday (Apr 3). The move marks Tesla’s intensified efforts to enter the Indian market, which has seen a surge in demand for electric vehicles (EVs) amid a global shift towards sustainable transportation.
The expansion into India comes as Tesla faces a slowdown in EV demand in its primary markets of the US and China, coupled with heightened competition. This led to a decline in Tesla’s first-quarter deliveries, falling short of estimates.
Tesla is eyeing Indian states with established automotive hubs, such as Maharashtra, Gujarat, and Tamil Nadu, as potential locations for its manufacturing facility. India recently slashed import taxes on select EVs manufactured by companies committing to invest at least $500 million and commence local production within three years, a move seen as facilitating Tesla’s entry into the market.
Although Tesla has sought to penetrate the Indian market for years, the Indian government has insisted on a commitment to local manufacturing. India’s EV market is steadily growing, albeit from a small base, and is currently dominated by domestic automaker Tata Motors. EVs accounted for approximately 2% of total car sales in India in 2023, with the government aiming for a 30% share by 2030.
Analysts predict that Tesla’s potential entry into India will catalyze further investments in the EV sector and provide opportunities for local auto parts manufacturers. Over the past year, Tesla officials have engaged in discussions with Indian government officials, including a June meeting between CEO Elon Musk and Prime Minister Narendra Modi.
In July last year, Tesla expressed interest in establishing a factory in India to produce an EV priced at $24,000 and advocated for reduced taxes on higher-end models intended for the Indian market.
